Home Loans & Mortgages
A home loan or mortgage is a loan from a bank or a financial institution to buy, build, refinance, or renovate a residential property.
In Australia, a home loan typically has a 25-30 year loan term, which is repaid via regular repayments. There are many different types of products on the market and many factors to consider when deciding on the best mortgage for your individual financial circumstances.
1. How these loans are structured is typically based on,
- The purpose of the loan.
- Purchase by a first-time home buyer or Owner-occupied.
- Property investor, or
- Refinance or restructure an existing loan.
2. The Interest Rate type;
- Variable Rate: meaning the interest rate can move either up or down at any time based on the market,
- Fixed rate: meaning the rate is ‘locked in’ for a set period.
- Split Rate: where a portion of the loan is fixed, and the rest is variable.
3. The setup;
- Loans can either be based on principal and interest repayments or interest-only repayments.
A home loan is secured against your property, so if you are unable to continue paying the loan, the lender may ultimately be able to sell the property to settle the debt.
How to choose what Home Loan or Mortage is right for you?
When it comes to comparing home loans, the interest rate is an important consideration and can make a significant difference in the total cost of a loan. There are also several other factors you need to consider when comparing loans:
The Fees attached to the loan Features available, including an offset account or redraw facility.
It is worth keeping in mind that going with the lowest interest rate will not necessarily mean you are getting the cheapest home loan in the long run.
Up-front and ongoing fees can cancel out some of the money you would save in interest, while the features you get with the loan may boost the value you are getting overall. For example, a home loan with a slightly higher interest rate which allows you to make extra repayments and offset interest, might better suit homeowners and help them get ahead faster than the ‘cheapest’ home loan rate would.
Check out our Home Loans Calculators Page to help work out what your interest rate could cost you both in monthly repayments and over the life of the loan.
If you would like more information on Home Loans and Mortgages, please contact the team at TFC today!